Monday, January 16, 2017

Trump Predictions by Airlines and Tour Operators

As Cuban Tourism Booms, U.S. Travel Companies Wonder: What Will Trump Do?

MIMI WHITEFIELD MIAMI HERALD ON JAN 16, 2017SOURCE: MCCLATCHY

Jan. 16--The wait in the line to exchange money at the Havana airport can stretch on for hours, reservations are a must at popular private Cuban restaurants and tangerine and hot-pink-colored vintage cars ferrying visitors crowd the streets around the most frequented tourist destinations.

Tourism on the island is definitely booming. Cuba welcomed a record 4 million visitors last year, a 13 percent increase over the previous year that also was a record. And during the recent holidays the tourism stampede showed no signs of abating.

This year, with new cruise and airline service coming on stream, could be another record-breaker. Cuba is expecting an additional 100,000 visitors to the island in 2017, according to the Ministry of Tourism.

That is, unless President-elect Donald Trump throws a monkey wrench into U.S. visits to this new hot market.

He has warned that unless the United States gets a better deal in its developing relationship with Cuba and the Cuban government makes some political concessions, he might scrap the whole normalization process initiated by the United States and Cuba on Dec. 17, 2014.

That could jeopardize both cruise service from the United States and regularly scheduled flights by U.S. airlines, which resumed last year, as well as limit the number of Americans allowed to visit the island. Under President Barack Obama, Americans who fall into 12 approved categories, such as those making family visits or on educational or people-to-people trips, may travel to the island. Their travel is supposed to be purposeful, rather than a vacation toasting themselves on Cuban beaches.

Those more liberal rules meant that by mid-year 2016, visits by Cubans living abroad -- most of them residing in the U.S. -- and by other U.S. travelers to Cuba had climbed to the second and third spots among all international visitors to the island, trailing only visitors from Canada. From January to June, non-family visits increased from 76,183 to 136,913, and that was before the first regularly scheduled flights from U.S. cities to Cuba in more than half a century began in August 2016.

Full-year breakouts aren't yet available for 2016, but Josefina Vidal, Cuba's chief negotiator in talks with the United States, said recently that the combined total of visits by Cuban Americans and other U.S. travelers last year was 614,433, a 34 percent increase.

From Miami International Airport alone, 588,433 passengers departed for Cuba in 2016, compared to 444,667 the previous year. Included in the count are Cubans returning to the island after making U.S. visits. Passengers arriving and departing for Cuba through MIA reached nearly 1.2 million last year, compared to 907,263 in 2015.

Miami is the main hub for Cuba-bound travel from the United States, but other Florida cities, including Fort Lauderdale, Tampa and Orlando are also competing for Cuba-bound passengers.

The U.S. Department of Transportation also has granted authority for travel between Cuba and other U.S. cities, including Los Angeles; Charlotte, N.C.; New York; Atlanta; Newark, N.J.; Chicago; Philadelphia; Minneapolis and Houston but not all the airlines awarded flights have begun to offer service.

Alaska became the latest U.S. airline to join the rush to Cuba when it inaugurated service from Los Angeles to Havana on Jan. 5. However, some U.S. airlines flying to Cuba have already reduced the number of daily flights to the island but not the number of destinations.

U.S. tour operators such as InsightCuba are coming off their best year ever in arranging tours to the island. The New Rochelle, N.Y., company took nearly 5,000 people to Cuba in 2016. The company is proceeding full speed ahead with new products planned for this year, but its president, Tom Popper, says Trump's election has raised questions marks.

During his recent Senate confirmation hearing, Rex Tillerson, Trump's nominee for secretary of State, said Obama's executive orders that allowed the opening to Cuba would be among those slated for review by the Trump administration.

"Whatever line of business you're in, it's really hard to predict what will happen," Popper said. "I don't see an elimination or reversal of travel policies for Cuba, but I could foresee some changes. Eliminating it all would be very extreme."

He said one reason for optimism is that "the new commander in chief has also been the hotelier in chief. I think he will balance that with his policies toward Cuba." Any change in Cuba travel policy -- either beneficial or making it more difficult to travel -- would probably take from six months to two years to impact visitors to the island, he said.

When President George W. Bush took office in January 2001, backed by a supportive Cuban diaspora, new, more restrictive travel and remittance policies for Cuba didn't go into effect until mid-2004.

"I don't think anyone really knows what (Trump) will or won't do. We've been in this business for a long time and we've seen a lot of different administrations, so if there are changes, we will adapt and adjust to whatever the OFAC (Office of Foreign Assets Control) guidelines are and whatever we have to do to serve our customers best," said Michael Zuccato, a co-founder of Cuba Travel Services.

California-based CTS, which used to offer extensive charter flights to Cuba, already is in the process of reinventing itself after the advent of regularly scheduled flights to Cuba. It only plans to offer seasonal and private charters and is focusing on vacation packages to Cuba as well as offering visa services and call-center support for four commercial airlines that are among those flying to Cuba.

Zuccato is keeping his fingers crossed. "He's a business guy, so I'm hoping he'll act in the best interest of American business," he said.

It's not just an increase in U.S. travel that is pushing up Cuban tourism numbers. There were also significant increases in the number of visitors from Germany, France, Italy, England, Spain and Mexico during the first half of last year.

A steady stream of celebrities and fashionistas -- Madonna celebrated her 58th birthday by dancing on a table at an Old Havana restaurant and the Kardashian clan filmed episodes of their reality series in Havana last year -- also is beating a path to the island.

But not everyone is a fan of Cuba's growing tourism industry.

A letter to President-elect Trump, signed by five former U.S. ambassadors, James Cason, Everett Briggs, Elliott Abrams, Jose Sorzano and Otto Reich, urged him to prohibit purchases of Cuban goods, partnering with Cuban government entities -- and tourism -- in accordance with U.S. law.

Instead of "easing the lot of the Cuban people," Obama's opening to the island "has had the effect of giving a new economic lease on life to the regime," they said.

While the Cuban government, and increasingly the military, does control the hotel and tour industry in Cuba, tens of thousands of Cubans, from private tour guides and taxi drivers, operators of private restaurants and bed and breakfasts to those who sell services and handmade goods have seen their incomes rise because of burgeoning tourism.

Cuba has an ambitious plan to expand its hospitality resources, but at this point all the visitors are putting a strain on the island's infrastructure.

On a recent night, the Yellow Submarine, a Havana rock club, had run out of both beer and ice, and there are periodic shortages of beer, bottled water and other products at stores that sell products in Cuban convertible pesos (CUCs).

As the demand for rooms increases, hotel prices have shot up. Rack prices at some of the better Havana hotels exceed $500. On a recent weekend, a single room at the Four Points by Sheraton Havana, which is now managed by Starwood Hotels & Resorts, was $340 and a double room started at $390.

Recent visitors to Cuba also say they've noticed taxi inflation. A five-CUC ($5.75) fare several months ago is now up to 13 CUCs, said Popper.

"It's not so much the inexpensive beach destination for Canadians any more," he said.

But Popper expects hotel prices will level out and start coming down this year. "I'm also expecting a little bit of a cooling off from the Obama wave" that began in early 2016, he said. "Prices became artificially inflated because the demand was so fast and furious."

To lessen the price inflation, InsightCuba is offering a trip this year that includes four days of people-to-people activities in Varadero Beach, where the price of hotel accommodations are more down to earth, with just a day trip to more expensive Havana.

Although the hotels have been overflowing during the winter season, Popper said he expects demand will start to slow in the off-season.

While hotel accommodations are still pretty tight, "the increase in pricing is starting to bring down demand," said Zuccato.